Natural Gas Price Dips Following Unusual Winter Inventory Increase

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 7 billion cubic feet for the week ending February 24. Analysts were expecting a storage decline of just 5 billion cubic feet. The five-year average for the week is a withdrawal of around 132 billion cubic feet, and last year’s storage decline for the week totaled 48 billion cubic feet. Natural gas inventories fell by 89 billion cubic feet in the week ending February 17.

Natural gas futures for April delivery traded down by about 0.7% in advance of the EIA’s report, at around $2.79 per million BTUs, and traded at $2.76 shortly after the data release. Natural gas closed at $2.80 per million BTUs on Wednesday, just below a high of $2.81 last Thursday. The 52-week range for natural gas is $2.45 to $3.65. One year ago the price for a million BTUs was around $2.46. Natural gas prices have fallen by more than 25% since the beginning of the year.

Demand for natural gas is expected to rise over the heavily populated East Coast and Midwest this week as a blast of cold air sweeps down from Canada dropping temperatures below zero in the upper Midwest and Northeast. Warmer weather returns next week, however. Overall demand for natural gas will rise to high over the next few days and then drop to low next week.

Stockpiles rose week over week from 10% below their levels of a year ago to 7.3% below last year’s level, and have reached 14.1% above the five-year average, nearly double week-over-week.

The EIA reported that U.S. working stocks of natural gas totaled about 2.363 trillion cubic feet, around 295 billion cubic feet above the five-year average of 2.068 trillion cubic feet and 187 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 2.550 trillion cubic feet for the same period a year ago.

Here’s how share prices of the largest U.S. natural gas producers reacting to today’s report:

  • Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded up about 1%, at $83.86 in a 52-week range of $80.76 to $95.55.
  • Chesapeake Energy Corp. (NYSE: CHK) traded down about 3.4% to $5.38. The stock’s 52-week range is $3.32 to $8.20.
  • EOG Resources Inc. (NYSE: EOG) traded down about 1.2% to $98.84. The 52-week range is $66.18 to $109.37.

Furthermore, the United States Natural Gas ETF (NYSEMKT: UNG) traded down about 0.9%, at $6.71 in a 52-week range of $5.78 to $9.74.